While so much of Fintech boomed during the height of the COVID health crisis due to lockdowns, social distancing, and a rise in shopping online, Insurtech is one area of Fintech that fortunes sagged, at least according to GlobalData’s numbers.
According to their research, in 2020, Insurtech saw a record $10.369 billion in investment topping 2019 by around $400m. In 2021, things reversed, and only $2.12 billion was dedicated to global investment in Insurtechs – a huge decline of 79%.
Ben Carey-Evans, Senior Insurance Analyst at GlobalData, commented on the data:
“These trends are likely due to a combination of factors. As highlighted, investment into the sector has dried up somewhat. Funding rounds are essential to keep Insurtechs running in the early stages before they become profitable, so reduced investment is a significant barrier.”
He added that Insurtechs need to focus on offering value to consumers, as that is what they need in the immediate future.
“This can be achieved by relying heavily on artificial intelligence to cut processing costs, or by offering innovative products such as pay-as-you-drive and on-demand policies. The latter would allow consumers to control how much they pay or receive cover only when it is strictly needed.”
The report adds that the decline in investment has led to job losses by some firms.
And what about 2022? Well, so far, it’s ho-hum with only about a billion invested. The ongoing recession certainly does not help.